Mortgage Tips

TEN handy BLACK & WHITE tips for paying off your mortgage quickly

1. Pay off as much as you can affordIncreasing your repayments can take years off your mortgage and save you thousands in interest.-Example-For a Home Loan of $300,000· By paying an extra $10 per week…It will save you $18,847.66 and pay your mortgage off 1 year and 8 months earlier.· By paying an extra $20 per week…It will save you $35,456.75 and pay your mortgage off 3 years and 3 months earlier.· By paying an extra $50 per week…It will save you $73,435.78 and it will pay your mortgage off 6 years and 10 months earlier.(figures are only approximate and based on an interest rate of 5% and original term of 30 years)

2. Make your first repayment on settlement dateYour first home loan repayment will generally fall due one month after settlement. Making your first repayment on your settlement date reduces the principal before the first lot of interest accrues on the amount you have borrowed.

3. Make extra repaymentsBoth consistent and ad-hoc additional repayments such as bonuses and tax returns work to reduce the principal on your mortgage faster. The earlier in the loan term you begin making additional repayments, the greater the benefit in terms of time and money saved.

4. Make repayments more oftenIf your loan repayment amount is calculated monthly, you can make significant additional savings by halving your monthly repayments and paying fortnightly instead. This method will result in you paying an additional month’s worth off your mortgage every year, reducing the principal faster and of course meaning you will pay less interest.

5. Look for a good rateThe easiest way to pay your loan off sooner is to find a lower rate than the one you currently have, but maintain (or even increase) the amount you pay each month.

6. Pay loan fees and charges up frontPay establishment fees, legal fees etc up front rather than capitalising them into your loan. This will save your thousands of dollars in interest over the loan term.

7. Cut back on expenditureReduce expenditure on vices and redirect the money into your home loan instead. Smoking, an after-work beer, morning coffee and that afternoon chocolate fix all add up over the course of the week. Add to that buying at least one lunch, breakfast or dinner a week and you could be putting more than $50 extra a week into your loan. That results in saving thousands!

8. Don’t lower your repayments when interest rates fallWhen interest rates are falling, it may seem tempting to let your home loan repayments keep pace with the minimum required repayments and pocket the difference. Before doing this, consider that keeping your repayments at the old level will shave a significant portion of principle off your loan, particularly if rates continue to drop.

9. Review your loan regularlyReviewing your loan regularly will help you to assess its effectiveness and take steps to correct any waste if necessary.​10. Let your Mortgage Adviser helpWe are here to help and we are a totally FREE service. Let us save you both time and energy by doing the shopping and negotiating on your behalf.